Wyatte Grantham-Philips and Cora Lewis
NEW YORK (AP) – President Donald Trump has announced his latest tariffs, and they may have a lot to say in your wallet.
Trump’s drastic new tariffs are expected to raise prices for everyday items, along with previous taxation and retaliation around the world. The trade war has already rocked financial markets and brought businesses into uncertainty.
What impact do consumers and workers feel first? And what can households do in the face of so much uncertainty? Here’s what you need to know:
What are tariffs and how do they affect me?
Customs duties are taxes on goods imported from other countries. Companies that purchase foreign products will pay the customs duties imposed on them. As a result, they usually face higher costs than what is handed over to the customer.
Trump argues that tariffs protect US industry from unfair foreign competition and raise funds for the federal government. However, since much of what we buy today relies on the global supply chain, more steep tariffs mean you are more likely to see more expensive prices, from grocery aisles to repair your next car.
“It’s going to affect everything in the economy,” said Josh Stillwagon, an associate professor of economics at Babson University and chairman of the Economics department. “This immediate price increase is essentially going to be handed over to consumers here as soon as retailers have to buy new products.”
Do tariffs affect everyone equally?
no. Experts warn that these tariffs could escalate inequality. Low-income families in particular feel the cost of important essentials like food and energy, and they reduce their savings and rise, causing them to strain their budgets significantly.
Low-income households often spend a large portion of their income on essential products, whether it be food or other basic products, or soap or toothpaste), says Gustavo Flores-Macías, a professor of government and public policy at Cornell University, whose research focuses on economic development. For this reason, he said that even “relatively small price increases” would have a disproportionate effect.
The evidence of that disparity is mounted only on expensive items. Dipanjan Chatterjee, vice president and principal analyst at Forrester, pointing out the car rates currently being charged, explaining that the expected price rise of thousands of dollars for new imported cars is easier to absorb.
“That tax is even more serious for those who make money,” Chattersee said. “So, that’s a regression tax.”
How’s your work?
Beyond even more pressing pricing pressure, experts warn that tariffs could contribute to unemployment or low income. Trump claims that tariffs will bring manufacturing back to the US, but there could be layoffs around the world if businesses make profits or change sources.
“It’s not just about the price aspect and the decline in purchasing power,” Flores Mathias said. “As tariffs begin to progress through the economy… low-income families often go first. And the population sector is the most vulnerable.”
Economist Susan Helper, a former senior adviser to the White House Office of Management and Budget, said tariffs could potentially allow wages to rise, but this doesn’t seem to be one of them.
“There’s not enough certainty for a company to invest and create new, better jobs,” she said. “It takes at least a few years to make a profit from a new facility or factory. I don’t think people are confident that tariffs are stable enough to benefit that investment.”
Which consumer goods will be affected?
The tariffs announced by Trump on Wednesday are imports of taxes from almost all US trading partners, along with other taxes already in effect. And US shoppers now rely on many products made overseas.
Travel to fruits and vegetables, purchases of your next phone, orders from a pharmacy, new clothes, or mechanics using auto parts made outside of the US can all be affected.
Stillwagon said the timing of prices rising depends on stock. Much of this also depends on how businesses prepare and respond to new taxes. While businesses may stock their products in anticipation of these tariffs, he hopes some stores will see more immediate price increases.
Prices for perishable groceries may rise first, as supermarket inventory needs to be restocked more frequently. However, a variety of other items, such as electronics, home appliances, clothing, footwear, and more, could also be affected in the coming weeks and months.
“The annual loss for households at the bottom of their income distribution is estimated at $980,” according to John Breyo, vice president of Public Policy, Telecom and fraud, which cited an analysis from Yale’s Budget Lab. He said tariffs will disproportionately affect clothing and fabrics, and he expects apparel prices to rise by 17%.
Consumers are also likely to feel a tariff crisis on home buying, Breyo said. New taxes on building materials are estimated to increase the average cost of a new home by $9,200, according to an analysis by the National Association of Home Builders.
Restructuring the supply chain to emphasize domestic production is also extremely complicated and can take years. Stillwagon said there are several products such as bananas and coffee. The United States is not just a replacement for the same-scale production offered by other countries. And even products that can be made in the US will likely have inflation.
“The real concern here is that this isn’t a one-time price increase,” he said.
For products like coffee, helpers predict that people are likely to absorb costs while changing their shopping options for other products.
“If all you want is caffeine, I think you can switch to Coca-Cola,” she said lightly. “It’s probably good for California wines.”
Can I do anything to prepare?
Gathering up what you know what you need is a start, but there are limitations.
“If you have something you’re buying consistently – weekly, monthly – I don’t think it’s a bad idea to try and stock up ahead of time,” Stillwagon said. However, it is important to avoid the panic purchases that we see at the start of the Covid-19 pandemic, he and others added. This could lead to shortages appearing faster and prices could rise faster.
Also, I don’t want to buy lots of items that will end up wasted.
“If you’re planning on stocking consumables, make sure you have a plan on how to properly store them so that you don’t have to throw that 20 pound shrimp bag in a few weeks, for example,” says Breyault.
It may also be time to look for alternatives. From electronics to clothing, Flores Mathias says there may be more affordable second-hand or refurbished options. And Chatterjee noted that consumers want to start comparing prices for names of “private” or common labels of major retailers. Others may turn to home solutions, such as growing their own vegetables, he said.
Overall, experts say you need to assess your budget and consumption habits for the first step.
“This isn’t a hurricane, it’s around for seven days and then everything goes back to normal. I’m (temporarily) stocking toilet paper,” Chattersee said. “For everyone you know, this could exist until another administration comes in and changes trade policies.”
Is there anything to be aware of in the next few months?
According to Breyault, consumers should be aiming to further take advantage of what is called “reducing” in the grocery aisle. Reduced is a tactical consumer goods that manufacturers use to hide increased costs by changing package designs.
“Consumers can be prepared for inflation where tariffs are likely to worsen by entering the habit of checking unit prices for items on grocery shelves,” Breyo said. “Not all states need it, but if they do, consumers can more easily compare the unit price (such as cereal) of one item with another.”
The Associated Press is supported by the Charles Schwab Foundation for education and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Original issue: April 4, 2025, 11:21am EDT
